Buying a home is an exciting milestone, but it’s important to be aware of the risks involved during a real estate transaction. The transfer of large sums of money and sensitive personal information makes real estate transactions a prime target for fraudsters. Cybercriminals exploit urgency, social engineering, and weak security practices to intercept funds and steal data.

One word of advice for buyers and sellers is to slow down—fraudsters thrive on rushed decisions. Taking your time and staying vigilant can help you spot red flags and avoid falling for scams. This article outlines key strategies to protect yourself throughout the process.

The Growing Threat of Real Estate Fraud

According to the FBI’s latest Internet Crime Complaint Center (IC3) report, there were $1.6 billion in losses from January to May 2024, nearly $300 million more than the same period in the previous year.

As wire transfers increase, criminals are investing more time and resources in intercepting transactions. Their tactics are constantly evolving, making cybersecurity awareness critical.

Common Fraud Tactics and How to Protect Yourself

1. Phishing Attacks

Phishing is a form of social engineering where fraudsters use emails, text messages, or social media messages to trick recipients into clicking malicious links or opening infected attachments.

• Key advice: Do NOT click on links from unknown senders.
  For example, if you receive an email that appears to be from your real estate agent instructing you to click a link to wire funds to a specific bank account–pause. Double-check the sender’s email address, and verify wire instructions by calling your agent using a known phone number.

Often, clicking the link will install malware on your device, giving criminals access to your computer and any personal information stored there. You can find more examples of phishing attacks in this blog post.

2. Password Security

Passwords are the weakest link in most security breaches. Cybercriminals often target email credentials, which can give them access to financial accounts and transaction details.

• How to strengthen your passwords:
  • Use long passphrases instead of simple words + numbers (e.g., a line from your favorite song with symbols and numbers).
  • Avoid personal details (pet names, children’s names, birthdays—fraudsters check social media for clues).
  • Use a password manager to generate and store strong passwords securely.

3. Protecting Personal and Financial Data

Buyers must share sensitive data (e.g., tax returns, bank statements) with mortgage lenders, but legitimate lenders will never request documents via regular email.

• Best practices:
  • Use only your lender’s secure document portal for uploads.
  • If you receive an email requesting sensitive data, call your lender directly to verify.
  • The same rule applies to real estate attorneys—no legitimate firm should request sensitive data over unencrypted email.

As a precaution, if you ever receive a data request via email, call your real estate attorney to verify. If it’s fraudulent, it’s important to take immediate action.

4. Enabling Two-Factor Authentication (2FA)

Two-factor authentication (2FA) is one of the most effective ways to secure accounts. Even if a hacker steals your password, they won’t be able to log in without the secondary authentication code (usually sent to your phone or authenticator app).

• Recommended:
  • Enable 2FA on email accounts, social media, and financial platforms.
  • Avoid SMS-based 2FA (SIM swapping is a risk); use an authenticator app like Google Authenticator or Authy.

While 2FA can occasionally be bypassed, it significantly increases security and reduces the chances of unauthorized access.

5. Wire Fraud Prevention: The #1 Real Estate Cyber Threat

Wire fraud is the biggest financial risk in real estate transactions. Hackers target home buyers and sellers by impersonating attorneys, real estate agents, or title companies to trick them into wiring money to fraudulent accounts.

How to protect yourself:

• For Sellers:
  • Never send financial information via email.
  • If you want funds wired, visit the attorney’s office in person to complete a secure wire transfer form.
• For Buyers:
  • Only receive wire instructions via encrypted email.
  • Verify by phone—call your real estate attorney directly, using a known phone number (not one from an email).
  • Wire instructions will never change. If you receive an update claiming otherwise, assume it’s fraud.

Fraudsters create fake email addresses that look nearly identical to your attorney’s or title company’s email. Taking a three-step verification approach (encrypted email, phone verification, and consistency in instructions) is essential.

Choosing a Cyber-Savvy Real Estate Attorney

A good real estate attorney doesn’t just handle paperwork—they proactively protect clients from fraud. Buyers and sellers should ask their attorney:

• Do you have cyber insurance?
• Do you use encrypted email for sensitive information?
• What cybersecurity protocols does your firm follow?
• How do you handle wire transfers and document security?
• Do you have a breach response plan?

If an attorney cannot confidently answer “yes” to these questions, consider finding one with stronger cybersecurity practices.

Final Thoughts: Stay Vigilant, Stay Secure

Cyber threats in real estate transactions are a serious risk, but with awareness and the right precautions, buyers and sellers can protect themselves.

Key takeaways:

• Slow down—fraudsters use urgency to trick victims.
• Never click suspicious links or open unexpected attachments.
• Use strong passwords & enable two-factor authentication.
• Never send personal or financial data over unencrypted email.
• Always verify wire instructions by phone before sending money.

The best defense against cyber fraud is a combination of education, vigilance, and working with professionals who prioritize security. Taking the time to implement these practices can save you from financial loss and identity theft. If you are interested in learning more about how you can stay vigilant against cybercriminals contact Stefan Nathanson at Ligris + Associates PC.

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